Germany's Munich Re AG (MUV2.XE), the world's biggest reinsurer by premium revenue, Thursday announced a new program to buy back its own shares and said net profit almost halved in the third quarter on high costs for major claims. The company will buy back shares worth up to 1 billion euros ($1.35 billion) by April 30 next year. Munich Re said it considers an after-tax profit of EUR3 billion achievable in the full year after the performance to date and is thus slightly more optimistic than in August, when it targeted profit just below EUR3 billion. The after-tax profit target includes subsidiaries which are not fully owned by the group. The reinsurer expects gross premium revenue of around EUR51 billion, the midpoint of its previously targeted range. Third-quarter net profit fell 44% to EUR637 million, topping analysts' average forecast of EUR619 million. Increased expenditure in life reinsurance in Australia and the U.S., a loss on the disposal of the Windsor Health Group, the performance of derivative financial instruments, and significant negative currency effects also depressed profit. The investment result declined 5.5% to EUR2.10 billion, above the expected EUR1.87 billion. Gross premium revenue fell 5.4% to EUR12.50 billion, below the expected EUR13.12 billion. Operating profit, which many investors consider the best guidance of business performance, shrank by a quarter to EUR1.07 billion, better than forecast. Earlier this week, peer Hannover Re (HNR1.XE) reported a 23% profit decline for the third quarter due to a lower investment result, lower revenue and some large claims. It said, however, that it was on track for full-year goals. Reinsurers are suffering from downward pressure on rates they can demand from their customers, the primary insurers, partly due to the sector attracting additional funds from outside investors seeking higher returns than they are able to achieve elsewhere in the current low-interest rate environment. Source: MarketWatch
